Jon Kenfield, CEO of The Solutionist Group, shares his responses to some common family business people issues.
What issues are there when the business is split up among generations or extended family members when it no longer works as a ‘complete’ unit?
A major issue is often the tension between ‘equality’ and ‘equity’. Do you treat each of the children equally, in terms of dollar values, or do you try to do what everyone considers to be fair and right? The former tends to be an autocratic determination by parents that can cause deep resentments. The latter requires comprehensive discussions among family members as to what they consider constitutes ‘fair’ under all the circumstances. This often brings out deep family emotional baggage. It seldom works well when parents try to fit jobs, or businesses to their children. Things need to work the other way round.
How can the process be managed for an amicable future?
The only way to manage something like this is to open a profound and comprehensive dialogue in good time amongst all relevant family members, including their spouses or partners. An independent chair, or facilitator, is virtually a prerequisite to help the process along, unless the family is extraordinarily well-sorted.
What are your top five dispute resolution tips?
- Communicate, communicate, communicate!
- Establish the family’s shared values and individual/collective visions – these provide a frame of reference against which behaviours and decisions can be relatively objectively measured.
- Create a Code of Conduct that all family members are willing to abide by, and do it well before there's a major reason to need it!
- Use an independent chair, a facilitator or a mediator to manage difficult meetings.
- Have a shared plan, and ensure that everybody knows what the plan is.
- (Bonus point!) Treat everybody with respect and avoid aggression/blame – enrol everybody in developing solutions.
Studies suggest that a minority of family businesses in Australia succeed beyond the third generation. Why do you think that is?
Lack of shared values, visions, goals, plans, structures and processes. Until quite recently, there was very little knowledge in Australia regarding what it takes to hold a family together through its business and how to help both thrive over the long term.
How can family businesses best manage exiting a family member who is not up to the job?
With extreme care and consideration. The process needs to be objective. I usually involve professional HR or recruitment professionals in the process, which really needs to be run over time, not as a one-off event.